New Legislation Eliminates Barriers to New Housing Construction Across Arizona

With Arizona residents struggling to afford homes as prices soar and struggling to pay rising rents, Rep. Steve Kaiser (R-Phoenix) and Rep. César Chávez (D-Phoenix) have co-sponsored HB 2674, landmark legislation meant to improve housing availability and affordability in every area of the state. 

The bill is strongly supported by the Arizona Multihousing Association and the Home Builders Association of Central Arizona. 

Census figures indicate that more than 100,000 people move to Arizona annually, a rate of growth that has caused the state’s available housing supply to dwindle while demand spikes to record levels. At the same, zoning and land use policy enacted by municipalities has greatly hampered the ability of housing markets to respond to this surge in demand. Additionally, local neighborhood opposition to virtually every new housing development (known as NIMBYism or Not-In-My-Back-Yard opposition) has intensified in recent years. 

HB 2674 “declares that housing supply and affordability is a matter of statewide concern,” and take steps to promote more effective and more streamlined housing policy in three key areas:

     • Creating a new “by-right” zoning process for single-family and multi-family housing developments. The measure declares all       agricultural, residential and commercial land open for new housing. The bill allows up to eight single-family dwellings per acre or up to twelve two-family dwellings per acre.  The bill also allows multi-family housing to be built in proximity to major transportation corridors and employment centers provided the projects abide by certain height thresholds. Greater density is possible if approved by a municipality’s zoning ordinances or General Plan.

     • Eliminating subjective and costly aesthetic requirements that substantially increase the cost of housing.

     • Investing $89 million into the Arizona Housing Trust Fund to be used for shelter-related services. 

“It could not be more clear that communities across Arizona need new housing to ensure that residents and families can afford a roof over their heads,” said Courtney Gilstrap LeVinus, President/CEO of the Arizona Multihousing Association. “The reality is, these new homes can’t be built because of hyper-regulation and burdensome zoning at the local level. This measure is needed if our state doesn’t want a full-blown California-style housing crisis and California housing prices.”

Kaiser, a District 15 Republican, said: “I hear every day from my constituents who can’t afford to buy a house and can’t afford to pay rent. If we want to increase the housing supply to meet demand, we need to take action. If we don’t get serious ASAP, Arizona is also going to lose out on attracting the out-of-state businesses and large employers who helped drive our economy.”

Nationally recognized economist Elliott Pollack with Elliott D. Pollack & Company has studied the issue for decades. “The state needs as many as 270,000 additional homes simply to keep pace with demand,” said Pollack. “The home prices and rent that Arizonans are experiencing today are the direct result of a major supply-and-demand imbalance – one that very well may be the largest imbalance in state history.

The bill also includes an historic investment of $89 million into the Arizona Housing Trust Fund to provide funding for new homeless shelters and services. 

“This bill does two critical things to help solve our state’s prolonged housing crisis,” said Rep. César Chávez, a District 29 Democrat. “First, it removes antiquated regulatory barriers in order to build homes at a faster pace and homes that people can afford. Second, it provides one of the most significant investments possible for our state’s most vulnerable populations.” 

Stakeholders from both parties and experts in the housing sector agree: one-size-fits-all measures like rent control and so-called “inclusionary zoning” regulations are not the answer if Arizona intends to address a crisis that exists at all price points and across multiple regions. 

“Rent control isn’t an answer – it’s an economy killer and a market killer,” said Gilstrap LeVinus of the AMA. “Look at states and cities that have implemented ideas like rent control and they’re still in crisis. Policies like this would crush our housing markets, crush businesses and our economy. We need to encourage housing, not hamper it.”

Kaiser, who owns a small business, agreed. “Government regulation is what has caused this housing supply crisis – full stop. The last thing we need to do is create more barriers to building new homes.”

Pollack, the economist, said that experts in his profession “universally agree that price controls, including rent control and inclusionary zoning policies, don’t work and in fact usually make the problem worse. We do not have examples of price controls ever working in the American economy and Arizona will be no different.”

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